Restaurant owners face significant operational risks, from contamination to customer injuries and employee theft. Financial losses are often too great to overcome without proper risk mitigation strategies, forcing owners to shut down.
Business owners can protect themselves and their restaurant assets and employees with the appropriate restaurant insurance policies.
Business Owner’s Policy (BOP)
A business owner’s policy includes general liability, business property, and income insurance. While restaurateurs can purchase these policies separately, many choose to bundle them with a business owner’s policy to receive the following protection with one plan:
Commercial General Liability Insurance
Commercial general liability coverage pays for medical bills and legal costs when customers make bodily injury and property damage claims against the restaurant. Furthermore, restaurant owners also use this coverage to pay costs associated with advertising injury claims.
Commercial Business Property Insurance
Restaurateurs can suffer property damage and losses due to unexpected events such as vandalism, theft, and natural disasters. Commercial business property insurance pays to repair or replace stolen or damaged property and includes the physical structure and assets found inside.
Business Income Insurance
Restaurant owners lose significant money when they have to close their doors due to property damage from natural disasters and other unexpected events. Business income insurance helps restaurant owners remain solvent until reopening by replacing lost income, paying wages, and handling other covered expenses.
Protection Against Employee Claims
Restaurateurs face significant losses if an employee is injured or files a legal claim against the establishment. Consequently, many restaurateurs purchase workers’ compensation and employment practices liability insurance.
Workers’ Compensation Coverage
Some restaurant owners mistakenly think employee injuries are covered under commercial liability insurance, but that is not true. Instead, employers must also carry workers’ compensation insurance to protect them against financial liability if employees suffer work-related injuries or illnesses.
Workers’ compensation insurance covers all expenses related to employee injuries and illnesses, including medical bills and lost wages. For many states this coverage is a requirement.
Employment Practices Liability Insurance
Disgruntled employees can file legal claims against restaurant owners for wrongful discrimination, EEOC violations, harassment, and other disputes.
Litigation fees can reach hundreds of thousands or millions of dollars, depending on the legal claims and number of employees involved. Owners with employment practices liability insurance receive coverage when employees make legal claims.
Coverage for Restaurant Essentials
Restaurants require food, water, and equipment to operate. Losing access to one or more often leads to temporary closures and lost income. Restaurateurs protect their financial health with insurance coverage for restaurant essentials.
Food Spoilage Insurance
Since restaurants typically hold at least five to seven days’ worth of food, power outages and equipment breakdowns lead to significant losses. Owners can avoid the overwhelming expense of replacing spoiled food by carrying food spoilage insurance.
Food Contamination Endorsement
Contaminated food can cause food poisoning and the spread of communicable diseases, forcing the restaurant to shut down long enough to clean all equipment and replace the food.
Upon reopening, many restaurant owners must increase their advertising budgets to overcome the reputation damage caused by serving contaminated food. A food contamination endorsement pays for the associated losses until the restaurant reopens.
Water Contamination Insurance
Restaurants use an average of 5,800 gallons of water daily and cannot operate without it. Some switch to bottled water if the tap water becomes contaminated, while others must temporarily close until the issue is resolved. Water contamination insurance covers losses incurred when water becomes undrinkable.
Equipment Breakdown Coverage
Commercial kitchens contain numerous types and pieces of equipment that must be operational at all times. Property insurance pays to replace or repair equipment damaged due to external forces, such as fires.
However, restaurant owners should also obtain equipment breakdown insurance to cover damage due to power surges, operator error, and other internal causes. This coverage ensures timely repairs or replacement, limiting downtime.
Protection Against Actions Taken By Employees
The transient nature of the restaurant industry means that restaurateurs constantly hire and train new employees. While many employees do an excellent job, some take actions that put the restaurant at risk. Owners are able to safeguard themselves and their businesses from these actions with liquor liability and employee dishonesty coverage.
Liquor Liability Coverage
Restaurant owners who serve alcohol can be held liable if an intoxicated patron injures another party or damages property, even after leaving the establishment. This can lead to expensive lawsuits, but owners can avoid paying out of pocket by carrying liquor liability coverage.
Employee Dishonesty Insurance
Employee theft is a significant problem in all industries, but restaurateurs deal with specific risks. Unlocked inventory, easy access to cash, and high turnover rates set the stage for high levels of theft.
Due to the prevalence of theft, many restaurant owners purchase employee dishonesty coverage. This policy covers losses related to property theft, embezzlement, forgery, and fraudulent transactions. Employee dishonesty coverage can be added to the business owner’s policy or purchased as part of crime insurance coverage.
Protect Your Business With Restaurant Insurance Coverage
Protecting your restaurant business is essential, and so is having the right insurance. If you’re a restaurant owner looking to secure comprehensive coverage or have questions about your existing policy, Pro Insurance Group is here to help. We specialize in tailoring insurance solutions to meet your unique needs, ensuring that you can focus on running your restaurant with confidence.
Don’t leave your business exposed to unexpected risks – get started today for the protection you deserve. Your restaurant’s success and security are our top priorities. Contact Pro Insurance Group to speak with a seasoned agent today.